Credit cards effect on borrowing

Viewing 13 posts - 1 through 13 (of 13 total)

Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
February 17, 2012 - 8:55 am
Hey guys,
I recently just changed my homeloans into a portfolio loan and as part of the package i recieved a credit card for the first time. It was never going to be used until i came up with the idea of cashing the whole card out via my work efpos machine aka its limit is a $1000 i withdraw a $1000 and put it off my PPOR. Its 55 days interest free but on the 54th day i pay the grand back and the next day i do it again. I was just wondering if and i"m guessing Jaime or richard will be able to help me with this as they are resident helpers if i up the credit card limit to 5k or 10k and did the same thing would it affect my borrowing power? If so by much or its not really significant?
Thanks Tony
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
February 17, 2012 - 9:27 am
Generally speaking, you times the credit card limit by 5 and that’s the amount of borrowing you’re foregoing. This is a VERY general rule.
When working out the monthly costs of a credit card, most banks times the limit by 3% so a $5k limit will equate to $150 per month in your liabilities.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
February 17, 2012 - 9:39 am
Jamie has answered the question clearly and that should assist you however i would have to add i am not aware of too many cards that allow 55 days interest free on cash withdrawals.
If you have changed it to a Line of Credit then hopefully your lender explained the tax consequences.
Not ideal in my opinion and more expensive anyway.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
February 17, 2012 - 10:00 am
Tax consequences? umm not really explained to me . maybe ill just stick with limit. Still think its a good idea in terms of saving a few dollars on Ppor. Thanks guys for the reply i had a feeling you two would help me out
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email Me
NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
February 17, 2012 - 10:39 am
Great lender switches product without explaining consequences.
Mhhhh let me guess who it was.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
February 17, 2012 - 10:11 pm
They explained a bit i thought it was only bad if you were drawing out the funds for non property related things like cars etc? Which I'm not doing I'm just pouring all of my funds into PPOR as its the main account and not tax deductible.
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
grimnar
Participant
@grimnar
Join Date: 2010
Post Count: 86
February 18, 2012 - 12:57 am
Re the cash out function, be careful. Sometimes your interest free periods do not apply to cash advance…. Different banks, different cards, etc.
Scratch
Member
@scratch
Join Date: 2010
Post Count: 81
February 19, 2012 - 4:05 am
I would definitely be checking the T&C’s on the card, I have never heard of a CC that offers interest free on cash advances as someone has already mentioned. Terry, Jamie or Richard would probably be able to confirm or deny this.
Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
February 19, 2012 - 1:12 pm
mmm ive done it for a whole period and havent been charged a fee yet. the keyword there is yet. It is put through an efpos machine as a purchase. ill double check the terms for sure i knew it sounded to good to be true
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
RyanJD
Member
@ryanjd
Join Date: 2011
Post Count: 77
February 21, 2012 - 10:22 am
The way I do it is pay everything on my credit card (food, fuel, parking, bills etc) and then pay off the credit card with the money in my offset account before the "55 days".
Its not really 55 days its something like 30 days interest free then you have 25 days to pay off that interest. So if you pay if off at the start of the 55 days and pay it off before the end of the "55 days" it saves you some money because you have that money sitting in your offset account for 55 days before you have to use it to pay off your credit card. Read your terms and conditions, its on most banks websites.
Lots of credit cards don't have an annual fee either so it's win/win aslong as you do it correctly
I've done it for nearly a year, haven't paid any fee's or interest but unfortunatly I'm no good at maths to calculate how much I saved. Even if it's a little bit, its still a little bit saved!
Tony Fleming
Participant
@the-dark-knight
Join Date: 2008
Post Count: 396
February 21, 2012 - 10:56 am
RyanJD wrote:
The way I do it is pay everything on my credit card (food, fuel, parking, bills etc) and then pay off the credit card with the money in my offset account before the "55 days".
Its not really 55 days its something like 30 days interest free then you have 25 days to pay off that interest. So if you pay if off at the start of the 55 days and pay it off before the end of the "55 days" it saves you some money because you have that money sitting in your offset account for 55 days before you have to use it to pay off your credit card. Read your terms and conditions, its on most banks websites.
Lots of credit cards don't have an annual fee either so it's win/win aslong as you do it correctly
I've done it for nearly a year, haven't paid any fee's or interest but unfortunatly I'm no good at maths to calculate how much I saved. Even if it's a little bit, its still a little bit saved!
yeah i did some numvers and it all compounds it saves about $600 to 700 a year with my limit doesnt sound like much but thats money id like in my pocket not the blood sucking babks
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
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NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
morgstar
Participant
@morgstar
Join Date: 2010
Post Count: 15
February 21, 2012 - 11:21 am
Hi Richard
If you get a chance please check out the below link in regards to costs.
https://www.esuperfund.com.au/property/LoanAnalysis.aspx
I have put the location in St George's location finder they do say they offer home loans for super funds in the Orange area with the only exception that the max load amount needs to be under 500K. I will try and find out more info about the deposit but from everything i have seen it should be 20%.
Thanks
Morgan
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
February 21, 2012 - 11:28 am
Hi Morgan
Yes you are right but if you also check with St George Super Fund Credit Kogarah they will not go to 80% lvr for a new SMSF it is 72% lvr in Orange.
Also the SGB fees are as i quoted in the response to you other post not as you suggested being $6000 for the lot.
We do 4 / 5 Dragon SMSF deals per month.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender